Good morning, ladies and gentlemen, and welcome to the Amphastar Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. As a reminder, this conference call may be recorded. All statements in this press release and in the conference call referenced above, that are not historical are forward-looking statements. Including among other things, statements relating to the Company's expectations regarding future financial performance, backlogs, sales, and marketing of its product size and growth. The timing of FDA's filings or approvals including the DMFs of AMP, the timing of the product launches, acquisitions, and other matters related to its pipeline of products quantities. It's share buyback program and other future events, such as the impact of the COVID-19 pandemic. And really the responses of business and governments to the pandemic on our operations and personnel and on commercial activity and demand across the business operations, and results of operations. These statements are not historical facts but rather Amphastar historical performance and its current expectations, estimates, and projections regarding Amphastar's business, operations, and other similar or related factors. Words such as may, might, will, could, would, should, anticipate, predict, potential, continue, expect, intend, plan, project, believe, estimate, and other similar or related expressions are used to identify these forward-looking statements. Although, not all forward-looking statements may contain these words, you should not place undue reliance on forward-looking statements, because they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict. And in some cases Amphastar's control. After all results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in Amphastar's filings with the Securities and Exchange Commission. Including in the Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 16, 2020. In particular, the extent of COVID-19's impact on our business will depend on several factors including the severity, duration, and extent of the pandemic, as well as actions taken by the governments, businesses, and consumers in response to the pandemic, all of which continued to evolve and remain uncertain at this time. You can locate reports through the Company's website at http://ir.amphastar.com, and on the SEC's website at www.SEC.com. The forward-looking statements in this press release speak only of the date of release. Amphastar undertakes no obligation to revise or update information or any forward-looking statements in this press release or the conference call referenced above to reflect events or circumstances in the future, even if new information becomes available or if subsequent events cause Amphastar's expectations to change. I would now like to turn the conference over to your host, Mr. Dan Dischner, Vice President of Corporate Communication. Please go ahead, sir.

Thank you, Operator, and good morning everyone. Welcome to Amphastar's Third Quarter Earnings Call. My name is Dan Dischner, VP of Corporate Communications. Joining me on the call are Bill Peters, CFO; and Tony Mars, Senior Vice President of Regulatory Affairs and Clinical Operations. We appreciate everyone joining us today, and we look forward to sharing some of our very exciting pipeline updates, how well Primatene has trended, and other great news. I would like to first start by sharing the exciting pipeline updates I just mentioned. I am pleased to announce our intranasal Epinephrine and NDA that will target the Epinephrine auto injector market. Thus far our intranasal Epinephrine product has completed its Phase 1 clinical trial, and we plan to begin Phase 2 clinical trials in the first quarter of 2021. While we usually do not discuss Phase 1 clinical trial results, I'd like to share that we believe our novel formula of Epinephrine significantly increases drug absorption rate while using an intranasal route of delivery for anaphylaxis treatment. This offers a very attractive and non-invasive delivery option compared to the currently marketed Epinephrine products, that being of course as an intramuscular injection with an auto injector. We are excited about the potential opportunity this brings to strengthen our portfolio and provide a new treatment option for patients experiencing an anaphylactic reaction. For epinephrine auto injectors, the 2020 equity data annualized sales has an addressable market of over $4 billion. Moving on to business, our third quarter saw sales growth of 4% compared to the same period in 2019. Net revenues in Q3 compared to the prior quarter saw a decrease of 3%. We attribute this primarily to the impact of our IMS product portfolio, which previously benefited from market shortages, and the third quarter saw lower demand due to the resolution of these market shortages. Regarding Primatene MIST, we continue to see progressive growth on this product due to our recent Kroger store launch and our nationwide TV, radio, and digital marketing campaigns. We will soon publish an updated presentation on our website, where you can observe that Primatene still presents a strong growth trajectory as the product has seen sales growth of 4% compared to the previous quarter. We have great confidence in our ability to continue to grow Primatene, therefore our ad spend for Primatene will increase by 20%, or to put it in dollar terms, in the range of an additional $1 to $2 million on an annualized basis. Moreover, I'm pleased to announce that we are working on adding an additional distribution point for Primatene MIST with a nationwide mass marketing retailer, which we anticipate the launch sometime in the first or second quarter of 2021. We will continue to explore other opportunities in large retail chains. On a final note on Primatene, I'd like to announce that we'll be investing in a new TV commercial, we also will invest in digital media to broaden our market reach in the 18 to 34-year-old demographic. We continue to reiterate our guidance for Primatene, which is expected to reach prior peak sales of $65 million annualized next year in 2021. As we advance, we continue to expect our marketing spend to be a lower percentage of sales. Regarding our recently launched Epinephrine multi-dose vial product, Q3 has demonstrated that this product still benefits from its 180 days of market exclusivity as we still make our reintroduction into this market. Demonstrating this, our Epinephrine multi-dose vials saw incremental growth by 7% compared to the previous quarter. We previously stated that we want to be competitive in this market without severely disrupting it, and the goal has been going as planned. With our AMP001 product, we were given a good do for target action date for the third quarter of this year or the fourth quarter if another pre-approval inspection was needed. We want to disclose that we are still awaiting a decision from the agency as they have not postponed the GDUFA date. However, the action date was not met. While AMP001 is still in the same review cycle, we continued to maintain a positive dialogue with the agency and are still excited about AMP001 as it is still on track to become the first generic to hit the market. Regarding AMP002's projections, we remain confident that the agency will find it to be therapeutically equivalent, and continue to anticipate a fourth-quarter GDUFA target action date. Although news about AMP001 may temper AMP002's status expectations, our GDUFA due if a date is still in the 4th quarter. We will keep you updated if we hear a response regarding the product's progress with the agency as needed. Regarding our China facility in Nanjing, otherwise known as AMP, it continues to advance towards completing construction of its finished pharmaceutical product facility, and then eventually for its finished product launch for the Chinese domestic market. Regarding an update on a timeline towards completion, we will provide one as we approach closer to the date in the future. On a similar note to our international efforts, we continue to progress on our IMS UK product launch and anticipate our first launch in early 2021. We currently have multiple products on file and are working through the approval process. Next, I'd like to bring up our insulin programs. We have made progress on our insulin biosimilar products, specifically in the characterization and clinical stage. And our final pipeline item, I'd like to bring up is intranasal Naloxone. We remain on track for refiling intranasal Naloxone in 2021. On another note, I'd like to talk about enoxaparin briefly. Although there have been exits and a new entrant into the enoxaparin market, we have a long-term commitment to this product, and this product has shown some improvements, seeing a 22% increase compared to the same period in 2019, and a 14% increase compared to the previous quarter, attributing this to a greater market opportunity presented recently. We are confident that our quality systems will prove to be the difference as our longstanding experience in this area. Since we are the only company that manufactures both the enoxaparin's API and finished product in the United States. Finally, we continue to see success in our pipeline development, as demonstrated by our intranasal epinephrine product's progress. We remain committed to the prospects of AMP001 and 002, while we anticipate Primatene sales and the trend upward as we approach allergy season. Although factors outside of Amphastar's control may have tempered some expectations for now. We want to assure everyone that our success is made organically and is demonstrated by our R&D scientific and technical progress, especially regarding intranasal Epinephrine and the proprietary formulation technology of this product. We are confident that our pipeline development will continue to demonstrate our technical capabilities. I will now turn our call over to our CFO, Bill Peters to discuss our third quarter financials.

Thank you, Dan. Sales for the third quarter increased 4% to $83.4 million from $80.1 million in the previous year's period. Primatene MIST saw sales growth of 255% to $13 million from $3.7 million in the third quarter of last year, with strong sales to our current customers growing online sales at Amazon.com, as well as the launch of Primatene MIST at Kroger, which is one of the largest grocery chains in the country. Enoxaparin sales increased 22% to $11.6 million from $9.6 million as we have left the enoxaparin market. Epinephrine multi-dose vials saw sales of $2.8 million in the second quarter after entering the market. Other finished pharmaceutical products saw a sales decline of $4.1 million as a competitor, who had previously had supply issues, returned to the market. Our insulin API business saw sales of $2.1 million, down from $4.4 million last year as last year's sales numbers included a $1.5 million amendment fee for mankind. Cost of revenues increased to $46.9 million from $44.9 million. Gross margins were relatively unchanged at 44% of revenues. We had increased gross margins related to newer higher-margin products such as Primatene MIST and epinephrine multi-dose vials, which were offset by lower sales of Naloxone and other finished pharmaceutical products. Selling, distribution, and marketing expenses increased 14% to $3.7 million from $3.2 million due to advertising and distribution costs, including television commercials for Primatene MIST. General and administrative spending increased 6% to $11.7 million from $11 million due to higher legal expenses. Research and development expenditures decreased 5% to $17.6 million from $18.6 million as lower expenses in China were partially offset by increased costs related to our biosimilar insulin program, our generic inhalation program, and our newly disclosed intranasal Epinephrine product. The company reported net income attributable to Amphastar shareholders of $3.9 million or $0.08 per share in the second quarter, compared to net income of $1.3 million or $0.03 per share in the third quarter of 2019. The company reported an adjusted net income of $7.6 million or $0.15 per share compared to an adjusted net income of $5.2 million or $0.10 per share in the third quarter of last year. Adjusted earnings exclude amortization, equity compensation, impairments of long-lived assets, and one-time events. In the third quarter, we had cash flow from operations of approximately $8.8 million as we reduced inventory and accounts receivable levels. During the quarter, we used a portion of our cash to buy back approximately $4.3 million of stock. I will now turn the call back over to Dan.

Yes, operator, we're ready for the Q&A.

Your first question comes from Jacob Hughes of Wells Fargo Securities. Your line is open.

Hey, thanks for taking the question. I wonder if you could just comment on the trends for Primatene in the quarter. It looks like the growth slowed a bit sequentially, and we had the leveling off in the pantry load at the beginning of the year. I think you launched Kroger at the beginning of the quarter. So, if you could just touch on how that's going, if there are any other retailers you could launch, and how you're thinking about the upside to the $65 million sales target?

Sure. Great, yes, we still feel Primatene's trajectory is good. There might have been some slowdown because of the pantry loading as we've talked about in the past, but we still feel like the trajectory is returning to what we expected it to be. The Kroger launch has gone really well, we see that there, Amazon has been doing well as well. Even though we still believe that this product is performing better in physical stores, as we've seen it perform better there. But we do believe Amazon will continue to be an important component. We are planning, and we're hoping to launch in the first or second quarter of next year into a major retailer, so we hope that will also help with sales growth. And as we've said, we believe that the advertising campaign and the new commercials will really help us and we have confidence that we can achieve those peak sales of $65 million that we had previously shared.

Yes. And just a couple of more points. One is that we're updating the slide that shows this in-store sales levels to our investor presentation; if it's not out there now, it will be by the end of the day. Additionally, I said Kroger early in the quarter, actually it wasn't earlier in the quarter, it was actually delayed in the quarter. So while we did have some loading in sales to Kroger, they did not have the opportunity to put in reorders during that time.

Got it. That's helpful. And then regarding the current status, the coverage is impressive; what is the ongoing issue with the FDA? Thanks.

Yes, hi, this is Tony. We don't really see anything that's triggering delay, it's not as though we are going through cycles with the agency. Right now, we're in routine communication with the agency essentially just getting kind of routine updates. What they're telling us is just that they have not met their action date. So, we're not really clear; we just expect it's part of their normal review cycle for a complex product like this.

Hi, Gary Nachman with BMO Capital Markets. Your line is open.

Good morning, Gary, there?

Can you hear me?

Are you there? Hello? Operator, we don't hear anything on our end?

One moment, sir.

Operator, can we just move to the next question?

Okay. Gary Nachman, your line is now open.

Hi there, can you hear me?

Yes, there we go.

Great. I'm not sure what happened there, but it's roughly on for Gary. Regarding the intranasal Epinephrine opportunity, how long do you expect the Phase 2 trial to run, and what additional studies will be required after that?

Yes, hi, this is Tony again. Well, we've been working pretty closely with the agency on this product. What I can say is we're very encouraged from some of the comments that we've received from the agency. They're very positive, they are very clear on what the expectations are. As Dan said, we've completed our Phase 1. The results are very promising, and the PK profile is very encouraging. We're planning to go into the Phase 2 trials very shortly thereafter. Rather than get into the complexities and the scale of the trials, what I could say is, broadly, if things go according to our plans, we anticipate to be filing this application sometime in 2022.

Thanks. And then, I was also hoping you could comment on gross margin heading into 2021. I know there's an incremental benefit in 2020 for Primatene that won't reoccur. So, just any color there would be helpful? Thank you.

Yes. So, while we did have the issue with Primatene where we had expenses for many of the components that were purchased prior to the approval, that did help the gross margins last year, and this year we’ve burned through those components. We’re still using API, which had been expensed prior to launch, but that’s becoming a smaller and smaller portion of the cost of goods. However, Primatene MIST is still going to be growing next year. The higher sales of the product will be well above our corporate average. So that will help the gross margins in general. Also, the products that we expect to be on the market next year, AMP 001 and AMP 002, should have higher gross margins than our corporate average as well. We think that those trends will help us increase our gross margins next year.

Thank you.

Our next question comes from Tim Chiang of Northland Capital. Your line is open.

Hi, thanks. It looked like your third quarter came in a little short versus expectations, at least consensus expectations. I was wondering if some of the revenue that we thought you were going to get in the third quarter might be shifting into the fourth quarter or even the first or second quarter of next year. Obviously, you are still waiting for 001 and maybe 002, but what do you think the likelihood is that these product approvals really shift into 2021?

Yes. So the first thing there, Tim, is that yes, there is definitely always timing; some of these things are one-time events, some are just timing with the other finished pharmaceutical products. We did mention that we did have a competitive return to the market. So that was what was causing the sales decline there, and that should continue in the future. However, products like Primatene are very strong, and we expect growth with that product very definitely into the fourth quarter and well into next year; we are still targeting that $65 million sales target for next year. As for AMP 001 and 002, at this point in the approval cycle, since we don’t have approvals today, I would say that it’s unlikely we would have any material sales from either of those products in 2020.

Okay. And then, could you talk a little bit about just the Epinephrine multi-dose injection product? I mean, how is that doing in the hospital market? I know you're basically the first generic to enter that market. Well, are there other competitors that have entered?

No, we're the only one. So we have a 6-month exclusivity; so happy to be in that position. We are gaining market share, and the sales last quarter were primarily loaded into the wholesalers. The sales this year, which were higher than last quarter, were restocking, and then indicate the actual sales levels that we have now. Our sales; our market share grew over the course of the quarter. So we think that this product will also continue to grow sales as we look into the 4th quarter of next year.

Okay. And then, maybe just one last question on the intranasal epinephrine, given the Phase 1 data that you have. I mean, what's your plan in 2021? I mean, are you going to need additional studies? I assume you've met with the FDA recently or you plan on meeting with them to sort of discuss what other clinical studies you'd have to run here?

Yes, hi, this is Tony. We have had correspondence with the agency; we have an IND that we filed with them, and they've seen our clinical plan and gone through it. In 2021, we will have several trials that we'll be performing. We have a pretty good grasp of what those trials are; they're the types of trials that we've done before; we're familiar with conducting intranasal type trials. We're familiar with epinephrine and running trials with epinephrine. So, I think 2021 is where the bulk of our trials will be completed. They'll be Phase 2 and Phase 3 trials performed during that time. The emphasis is, we've been working with the agency on it, and their comments on this have been very positive. I really want to emphasize that they seem very eager for a product like this. Some strengths that we have for this product, I think, they've been able to see. We really have created a special enhancement agent that we're going to be using; that really will give us good differentiation in our product; we believe we will have a superior product that will be used for consumers, and we're very encouraged by that, and we think the agency feels the same.

Okay, great. Thanks.

Thank you.

Our next question comes from David Amsellem of Piper Sandler. Your line is open.

Thanks. So, on the good to injectable pipeline products, could you say whether you've had pre-approval inspections for one or both of these products? That's number one. And then number two is on the market shortages; I think you had cited potential—some potential revenue benefit from market shortages. So can you talk through what resolved, what hasn't been resolved, and what you think, what kind of benefit, if any, you can derive from any market shortages going forward? Thanks.

Yes, hi, we can speak to that. The pre-approval inspections for both products, AMP 001 and 002, were very rigorous inspections where they inspected every possible facility or component of our operations. This included manufacturing, our clinical site where these trials have been performed, and the laboratories where the analysis has been done. So those were very positive, and overall, we don't anticipate having additional inspections associated with these. The results were positive for all of those. Regarding your second question relative to the shortages, there were multiple shortages in many of our critical care products that are on the hospital fresh herbs, including products like dextrose, sodium bicarbonate, and epinephrine. A competitor who was frequently out of the market was shipping towards the end of the quarter, so we did not have the same level of sales because of their return to the market. They’ve had multiple outages and shortages over the last 10 years, so we really can’t predict whether they will or will not be able to satisfy the demand that’s out there for these products. But we do know that we have the ability to do that, and we have the increased capacity that we put on earlier this year. So we do have the capability and ability to meet demand should they encounter shortages.

Okay, great. Thanks, guys.

Our next question comes from Elliot Wilbur of Raymond James. Your line is open.

Thanks, good morning. Just first question I wanted to ask was around the intranasal Epinephrine development program. I'm presuming the path to approval is via a BE study versus injectable epinephrine, but just wanted to ask you to confirm if that's the case?

While we're doing the route of approval is the NDA through the 505 B2 route. So I wouldn't quite call it a BE. We’re not comparing it to just a general epinephrine injection; we'll be looking at the intramuscular EpiPen-type of device as far as what we will be comparing it here.

Okay. So I'm assuming there's a strong PK-based study or some endpoints in studies like this. I'm just trying to get a little bit better sense of what has to happen given the relatively short timeline that you have outlined in terms of potential filing?

I want to be careful about not disclosing too much. What I can say is there is a strong PK component to it. Maybe that will give you enough.

Okay. And is this just an internally developed program or is it partnered?

No, this is part of the capabilities that we have. This was completely developed internally; our scientists here came up with the concept, and what they've done is pretty extraordinary. As we get closer, we will be able to disclose a little more about it. You'll get a sense of some of that. We have IP filed for, and once that comes to light, I think you'll see how advantageous this product will be.

Okay, thanks for that. And I just want to ask a question on the quarterly business. You may have addressed it in your prepared commentary. I apologize I got a little bit late here, but in terms of the incremental step up, we've seen this in the past when you've had the opportunity to kind of go after off-contract sales on a short-term basis. It doesn't seem like that's the case in terms of what drove the upside this quarter. Just trying to get a sense of how sustainable this increase is?

Yes, essentially, it's not off-contract sales. Basically, a competitor has left the market; there were some sales we’ve been able to gather as a portion of what they had. Hopefully, our sales level can stay at this level. But yes, this market has seen a lot of twists and turns. As Dan did say in his prepared remarks, this is a product that we're in for the long term. We make the API; we make the finished product both here in the US. We're very confident about our prospects for this product and as a long-term generator of value for us.

So speaking in terms of long-term value generation with the competitor leaving the market, any chance that this product starts behaving more like a biosimilar rather than a commodity generic in terms of pricing?

Yes, that's our hope. But we haven't necessarily seen that yet.

Okay, fair enough. Just real quickly on Primatene; I haven't seen the updated slide deck yet to get kind of the latest data on the uptake here, but any other metrics that you could share with us in terms of how many stores the product is on shelf in? And I guess in terms of some of the early launch sites, what you're seeing in terms of, in terms of pull-through per week? I guess that's sort of how we look at that?

Yes, I think we're seeing it everywhere we launched the product; it's been well received. We feel like we recently launched in Kroger; that was towards the end of the quarter, and we expect that to do well. We're really close to being able to add another large retailer to our distribution points, and we believe that will also be significant. We continue to invest in advertising because we do see a very positive trend. With our advertising, both television and digital media, and I think with our digital media, we're really going to target the 18 to 34 demographic and expand that market. So, we're excited to see how that’s received in that group.

And just the chart that will be in on the investor slide shows continued upward growth in the weekly sales with.

Okay. And just last question, you are ANDA filers on Vasopressin. There has been a lot of discussion about that product in financial markets of late, given that we're approaching a trial date for a group of filers, as well as the possibility that Eagle may in fact not have a blocking exclusivity position and has also suggested they may be in a position to launch at risk. Just any updated developments or thoughts on your filing with respect to some of these recent emerging facts would be helpful? Thanks.

Sure. Well, it will be in our 10-Q, which we hope to get filed by the end of the day today. But we did settle during the quarter and that settlement is confidential, and it would be typical to other settlements that you've seen in these cases where there are multiple filers, so that's all we can really say at this point.

Okay, good. Thank you.

Have a good day.

Our next question comes from Serge Belanger of Needham. Your line is open.

Hey, good afternoon. A couple of questions on the Epinephrine opportunity here. I guess the first one is once your 180-day exclusivity expires, how many generics do you expect to enter the market? And then just more broadly, how big is this market? And as you think of your new Epinephrine product in development, what kind of role do you think it could play in this Epinephrine market?

Yes, okay. So, the size of the market is currently over $100 million. We expect to get our fair share of the market. We're not probably there yet, but we're happy with the gains that we've gotten over the course of the time so far. As far as competitors go, this is a product that was a grandfathered product for a long time; there were really only two competitors in it for a very long period. We don’t know of any other competitors, so I would guess that even though we have a six-month exclusivity that goes into the well in the fourth quarter here, we’re not expecting any significant number of competitors in the near future. So we think this is going to remain a strong product with relatively high margins, and we believe we will get a reasonable share in the not-too-distant future.

Yes.

I think the other question or second part of your question was about the intranasal epinephrine? Is that correct?

Yes, that's correct.

Okay. And how, now can you revisit that question because I think it kind of got mixed in there, was the first part?

Just your overall thoughts on what kind of opportunity you see with the intranasal products competing against these various injectables.

Well, I think, as we said, we do believe that it presents a new way of and a safer way of having epinephrine, and we're excited by it because the technology behind it has been very, very positive. i think we said the equivalent data for 2020 for the auto injector Epinephrine market is $4 billion. So that's the addressable market that we're targeting. Does that help?

Yes. And then, can we revisit the IMS UK products? It was well-recorded quite a while back. Can we just get an idea of how many products and the opportunity it will present?

Yes, it was about eight products. We believe this represents an annualized mid to high single-digit million-dollar opportunity for us. We waited until we had the new capacity available earlier this year to concentrate on those products, as we didn't have enough capacity to meet the domestic market's demand. Now that we have that capacity, we are shifting our focus back to the UK market, and Tony can provide an update on our progress with relaunching those products.

Yes, we have a number of products on file with the MHRA, and they're going through a little bit of a shuffle between Brexit and COVID19, they're essentially on lockdown, and most of the MHRA are working remotely. But nonetheless, we're working with them on that, and we are addressing any issues that come up, but the applications are on file with them, and we just continue to work through questions they may have.

All right. Thank you.

Thank you.

Our next question comes from David Steinberg of Jefferies. Your line is open.

Hi everyone, this is someone filling in for Dave. I have a couple of questions. You haven't mentioned your inhalation filing. Is there any update on that? Also, could you provide some insights on your SG&A spending, specifically what we can expect as we move into the fourth quarter and into 2021, including the investments you're planning to make?

Yes, hi, this is Tony. I can address the inhalation filing. The trials are wrapped up; all of the trials that we needed to do for that product are completed, and we're just compiling information as we prepare for the filing that we anticipate doing later this quarter.

And as far as the SG&A spend, a lot of that in the quarter is related to legal expenses. Specifically, we are getting closer; we had a lot of expenses along for the Vasopressin case and the Lexus scan case, and now that the Vasopressin case has been settled, those go away. So that should flatten out somewhat, but in the selling expense line, we are targeting an increase in spending in the fourth quarter for advertising on Primatene MIST, and we’re also looking to increase that spending next year as well. But in both of those cases, we believe that sales are going to increase faster than our spend, so that will lead to increasing operating margins from that product.

Great. Thank you so much.

No problem.

Operator, if that's it?

At this time, I would like to turn it back to the speakers for any further comments.

Great. I want to thank everybody for joining us today to share in our exciting news on our pipeline, specifically with our intranasal epinephrine product. We look forward to continuing to update you as these programs progress. We look forward to a good net in Q4, and meeting with everybody then. Everybody, please stay safe, and have a good weekend.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may all disconnect.